Showcasing the Value of Decision Management Solutions

© 2015 Fair Isaac Corporation. All rights reserved. 1

The gap between organizations seeking to maximize the use of analytics to improve decision making and their ability to actually do so has been a source of frustration for years. At the core of this disconnect has been several factors — time to value, overarching costs, slow execution times, overreliance on IT and scarce analytic resources, such as data scientists and analysts. Based on customer demand as well as analyst feedback, FICO has directed a unique and forward-looking branch of analytics called decision management — the art and science of operationalizing and automating the use of prescriptive analytics to optimize business results and customer engagements. This document is intended to provide a starting point for businesses across multiple industries to understand how and where analytically powered application development helps businesses get much more out of data and data-generated insights, leading directly to more profitable, consistent and engaging customer interactions.

What Is Decision Management?This term, popularized in the late ‘00s, is often referred to as decision automation (see Figure 1 on the next page). Inasmuch as the marriage of analytics, predictive analytics and decision modeling (with math-based optimization technologies thrown in) can present businesses with a prescriptive outcome — what is the next best action based on the inquiry and data — decision management is the science and art of operationalizing these decisions. Most often, it is the coupling of prescriptive analytics with application development and customer communication channels that

EXECUTIVE BRIEF

The FICO® Decision Management Suite:

Provides a cost-effective and streamlined way for organizations to evaluate, customize, deploy and scale state-of-the-art analytics and decision management solutions

Allows organizations such as banks, insurers, governments, retailers, telcos and utilities to quickly integrate analytics and decision management tools with their own components

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General

Analytics CustomerAnalytics A

CustomerAnalytics B

PredictiveAnalytics A

PredictiveAnalytics B

PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention

Partnership PanelDiscussion

CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud

Fraud Alert Fraud Analytics

Automotive Customer PackageGoods

Education Financial Services Gov’t Public Sector Healthcare

Automation Cloud Computing Collection and Debt Recovery

Communications Compliance Control

Customer Engagement

Improvement Innovation Insights Intelligence Mobility

Operations Optimizations Originations Payments Point of Sale Profitablity

Risk Management FICO Score Security Shopping Cart Strategy Sales Playbook

Hospitality Insurance Manufactuaring

Telecommunications Transport and Travel

Utilities

Pharma and Life Sciences

Retail Technology

Data Big Data Data Breach DataManagement

Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Showcasing the Value

of Decision Management SolutionsLeveraging FICO® Decision Management Suite to Solve Real-World Business Problems

differentiates or distinguishes decision management from analytics: Decision management focuses on distributing and integrating next-best decisions or actions into the day-to-day interactions or application infrastructure that a business relies on to interact with customers or decision implementers.

This process is easiest to articulate in customer marketing programs. If a customer demonstrates willingness to be tracked (through a loyalty program or interactive mobile application, for example) then business analytic systems can determine proactively the likelihood of that customer to make certain purchase decisions. Marrying this insight with a business decisioning system can generate retail or marketing offers likely to push purchase decisions with more urgency, or further enhance a retail relationship with that consumer. These offers are prescriptive: Here is what the business should offer that consumer. Decision management — the act of operationalizing that analytic — is all about making proactive and consistent customer offers or decisions and then automatically adapting/learning from the customer engagement to generate improved offer response rates. The ongoing customer offer and response

further enhances the business-to-customer relationship (to say nothing about the business’s enhanced bottom line improvements in revenue growth, or increased margins, or lowered risk). Customer engagement is only one area, albeit the easiest to describe and understand, where analytically powered decision making can be applied more efficiently and consistently drive virtually any business process.

Financial services organizations, particularly those that are dispersed across multiple geographies and regulatory jurisdictions, have been particularly aggressive in rolling out decision management frameworks. This may seem obvious as they have had to manage a complex array of qualification requirements, risk and fraud issues and regulatory and audit requirements, as well as demonstrate consistent growth and margins across a diverse set of offerings. While most other industries don’t face the myriad complexities that exist within financial services, however, each is consistently challenged to address constant and complex new waves of business, economic, customer and technology factors that ultimately can make or break a company. Decision management is core to weighting and

optimizing each of these factors so that organizations can navigate these waters and ultimately drive stronger customer engagement and profitability.

Understanding the philosophy underlying decision management and prescriptive analytics solutions is one thing (and something not covered here), but understanding its business applicability requires a separate narrative. The tools underlying decision management, like those integrated in the FICO® Decision Management Suite, provide the infrastructure and capability to solve a very diverse set of business problems. Like a hammer and nails, you can build almost anything, from a birdhouse to a multi-million-dollar mansion. This, in many ways, is very much a blessing and a curse: Acquiring tools for a diversity of use cases can sometimes blur the applicability to solve particular challenges. Therefore, this document attempts to articulate a few of the more popular use cases that clearly demonstrate the unlimited potential of decision management solutions.

EXECUTIVE BRIEFShowcasing the Value of Decision Management Solutions


Figure 1: Decision Automation

The tools underlying decision management, like those integrated in the FICO® Decision Management Suite, provide the infrastructure and capability to solve a very diverse set of business problems.

Decision Management: The Possibilities are Endless



Originations/New Customer Onboarding

Traditionally related to the consumer credit and mortgage application process, originations has evolved as largely a banking-only set of processes. While originations is a uniquely banking and credit term, it’s one that virtually every business in the world is challenged with — even when they call it something else. For consumer products or travel services, for example, originations may commence at the point of sale or initial interaction with a loyalty program application. On websites, it’s the login/password screen. For retail businesses, it may be the application you fill out for store credit. For other services, such as setting up a water or gas account, or telecom or internet services, it may be the series of questions that a call center agent walks you through over the phone.

Originations or new customer onboarding solutions use the basic information businesses gather from customers during that initial interaction to rapidly generate analytic insights that help determine what services should be provided at what cost. By

aligning customer preferences along with credit history, risk assessments, trade-off analyses and any other relevant variables, powerful and flexible customer onboarding solutions quickly detail the best set of offers that can be provided. Best offers are those that are most likely to appeal to the customer but also are balanced and optimized to reflect business priorities — such as risk exposure, or maximizing profitability, or competitive replacement. These customer onboarding solutions use analytics and mathematical algorithms to present offers that are optimized to balance both business priorities and customer satisfaction. Just as importantly, they are delivered or communicated in a manner that best suits a customer’s needs and preferences — via a call center agent, on the web, via social media, or through a mobile device or mobile application. They are optimized for the highest level of satisfaction; after all, a happy customer is a repeat customer.

Customer onboarding solutions are one of the primary application engagement use cases for the FICO® Decision Management Suite. Successful examples

of originations implementations are diverse and varied:

• FICO has a long history in creating analytically driven insurance underwriting solutions — leveraging predictive analytics and decision modeling that help insurers quickly determine the ability to issue policies, coverage, parameters and premium requirements to profitably provide insurance to individuals or business entities.

• As noted earlier, credit and financing is a core FICO focus for originations. Whether for credit card, home or auto financing, or business leasing, FICO is working with some of the largest names in the banking, credit and financing industries.

• Public and private utility and energy businesses have presented another clear originations opportunity for decision management. These organizations use FICO tools and expertise to speed the time to onboard a new customer, contractor or development project looking to add or connect a water, gas or electrical service.

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

Analytics

FICO Icons

Customer

Data

Decisions

Fraud Prevention

Industries

General


CustomerAnalytics B



PredictiveModeling

CustomerProfile

CustomerFull

CustomerAcquisition

CustomerRetention


CustomerNetworking

CustomerCentricity

CustomerGrowth

Decisions

FraudPrevention

First Party Fraud






Customer Engagement






Utilities


Retail Technology


Database

® 2014 Fair isaac Corporation, Confidential.



• Telecommunication providers are the latest businesses to benefit from analytic originations, creating consistent and automated infrastructures to bring on new telephone customers. For customers who are often confused by multiple offers, FICO’s onboarding solution automates the identification of relevant phone, data plans and rate plans to deliver truly customized offers that optimize customer and business objectives.

Fraud

In today’s supercharged global transaction environment, new schemes to perpetrate fraud are being launched on a daily basis, and can gain momentum with alarming speed. Whether it’s financial fraud — credit cards, for example — identity or application fraud (benefits, social security, customs, money laundering), or cyber fraud such as DNS spoofing, leveraging analytically powered applications to proactively identify and quarantine potential fraudulent behavior is increasingly a business imperative. No business is safe from the potentially ruinous impact of fraudulent or criminal activities to or by a customer base.

Because we all operate in a real-time, connected world, the impact of fraud is immediate and potentially calamitous. It’s therefore essential that fraud management solutions offer both the agility to respond quickly and comprehensive functionality to fight fraud across the entire enterprise and customer lifecycle.

FICO’s proven leadership in predictive analytics helps organizations achieve end-to-end fraud prevention, security and compliance management. With it,

institutions can cost-effectively reduce fraud losses, protect brand reputation, gain efficiencies and improve the customer experience across multiple products, channels and lifecycle stages. By leveraging FICO’s fraud applications and analytic tools to customize, enhance and empower a data-driven approach to identifying and rooting out fraud, businesses have access to unparalleled solutions to meet their real-time needs, no matter how unique or esoteric.

Adding the Decision Management Suite to the FICO fraud portfolio further enhances what FICO can offer to empower businesses to tailor pre-packaged fraud solutions to meet the most diverse needs.

Optimization

Every business across every industry has an optimization challenge: inventory, rolling stock, pricing, capital management, human resources or scheduling. The problem of identifying the best set of options from a plethora of possibilities has long been a challenge often relegated to spreadsheets, BI tools and the limitations of human processing capabilities. Today, optimization is a challenge that can be solved through mathematical and

analytical modeling. As a key part of the FICO® Decision Management Suite, optimization solutions have long been part of targeted use cases. With an initial focus on financial services, FICO has pre-packaged solutions for deposit, mortgage and credit pricing. In addition, FICO has pioneered optimization solutions for scheduling (sports, crews and flights), inventory and logistics (hotel rooms, car rentals, rolling stock), and customer offers such as promotions, discounts and bundles. Each optimization solution is designed to provide prioritized characteristics along with customizations to allow virtually any business to leverage industry-leading analytic technologies for even the most complex job.

The most diverse group of customers imaginable is using FICO’s optimization solutions, including the National Basketball Association, Southwest Airlines, American Airlines, Avis, Sprint, Honeywell, Nestle and many of the largest financial institutions in the world.

Success Story: VantivChallenge: Automate and optimize a manual new merchant onboarding process that previously required weeks.

Solution: FICO decision modeling and predictive analytics, supporting a new merchant onboarding process to expedite approvals — from weeks to seconds.

Results: Real-time approvals of new merchants in a dramatically streamlined onboarding process; a significant improvement in customer satisfaction.

FICO is a registered trademark of Fair Isaac Corporation in the United States and in other countries. Other product and company names herein may be trademarks of their respective owners. © 2015 Fair Isaac Corporation. All rights reserved. 4175EX_EN 12/15 PDF

NORTH AMERICA +1 888 342 6336 [email protected]

FOR MORE INFORMATION www.fico.com www.fico.com/blogs

LATIN AMERICA & CARIBBEAN +55 11 5189 8267 [email protected]

EUROPE, MIDDLE EAST & AFRICA +44 (0) 207 940 8718 [email protected]

ASIA PACIFIC +65 6422 7700 [email protected]


Customer Engagement

Decision management in the retail space involves using analytics to identify purchase patterns and predict buying habits. While basic analytic capabilities for retailers have been in use for many years, an end-to-end automated infrastructure to operationalize customer knowledge, leverage that knowledge to push promotions, and adapt responses to continuously refine and engage customers is relatively new. This is what leading-edge retailers and consumer product manufacturers are doing with Decision Management. Engagement and brand loyalty are things that can be extended far beyond a point-in-time buying decision. The world’s leading retailers and manufacturers know this. Disney, Nike and Coca-Cola are just a few of the significant brands that use continuous customer engagement to maintain ongoing customer dialogues that cement their customer

engagements well beyond individual transactions.

Retail and product loyalty programs represent another type of customer engagement solution that FICO delivers. By aligning marketing offers with customer habits, purchase proclivities and even location, linking analytics to user-friendly applications or websites has a proven track record in driving customer retention and sales growth.

Rethinking How to Integrate Analytics

New customer onboarding, customer engagement, fraud and optimization are only a few of the many use cases for decision management solutions. Creating and leveraging analytics in applications that simultaneously drive a more personalized customer engagement, business optimization and a consistent set of offers is no longer a futuristic fantasy. Integrating analytics

into decision making throughout business processes — customer engagements or otherwise — is real and happening in every industry. If your business is not exploring or actively engaged in the integration of analytics and optimizing your decision making then you run the risk of falling behind your competition.

The power of data and data-driven insights is not a new concept; business intelligence solutions for understanding historical data have been around for decades. What is new is the integration and alignment of business decisioning with data-driven predictive insights, giving businesses the power to align all the corners of their organization to do what’s right for customers and the business alike. These new analytically powered application solutions are changing the face of business and optimizing returns for investors, executives, employees and customers.

Discover how analytically powered application solutions

built on the FICO® Decision Management Suite can revolutionize

your business!

Showcasing the Value of Decision Management Solutions

Software